Love Culture Sales Approved Over Creditor Objection

July 31 (Bloomberg) -- Love Culture Inc., the bankrupt
clothing chain, won court permission to hold expedited store-closing sales, over the objection of unsecured creditors who
said the sales will only benefit the womenswear retailer’s
secured lender.

A U.S. Bankruptcy judge in Newark, New Jersey, approved the
sales today, according to a courtroom deputy. Love Culture
sought the sales as part of an agreement with pre-bankruptcy
secured lender Salus Capital Partners LLC, which is providing
$12 million in bankruptcy financing on an interim basis.

Great American Group Inc. won an auction yesterday for the
right to run the sales, beating out a joint venture of Hilco
Merchant Resources LLC and Gordon Brothers Retail Partners LLC.

The unsecured creditors’ committee, which includes mall
owners General Growth Properties Inc. and Simon Property Group
Inc., said Love Culture failed to show any benefit to the estate
from selling inventory, “its primary and most valuable asset,”
only two weeks after filing for bankruptcy.

Once the inventory is sold, there will be almost no assets
remaining for other creditors, the committee said in a filing.
The proceeds shouldn’t automatically go to Salus, the committee
said. Rather, the company should use the money to pay the cost
of administering the bankruptcy, it said.

‘No Chance’

General unsecured creditors “have no chance of recovery
once the agency agreement is consummated” and the bankruptcy
financing is approved, the committee said.

Love Culture was founded in 2007 by Jai Rhee and Bennett
Koo, former executives at retailer Forever 21, to sell
affordable clothes and accessories to young women, according to
its website. In 2010, the company started an online store. Two
years later, it started the upscale Boutique Culture line.

The company filed for Chapter 11 protection July 16 in
Newark. The retailer owes General Growth, the second-biggest
U.S. shopping-mall owner, $3.9 million on unsecured obligations
for store leases. It also owes Simon Property Group about $2
million and a Taubman Centers Inc. affiliate about $1.2 million,
court papers show.

The case is In re Love Culture Inc., 14-bk-24508, U.S.
Bankruptcy Court, District of New Jersey (Newark).